Sanctions Designations and ECHR Article 1: No UK Jurisdiction Without Territorial Presence or Assets

1. Introduction

Dana Astra Iooo (“DANA”), a Belarus-registered property developer, challenged its UK sanctions designation made and maintained by the Secretary of State for Foreign, Commonwealth and Development Affairs. The challenge was brought not by judicial review, but under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA 2018”), which requires the court to apply “the principles applicable on an application for judicial review”.

The designation, made under The Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (“the Regulations”), was justified on two bases: (i) alleged involvement in repression of civil society through sponsorship of the Belarusian National Olympic Committee (BNOC); and (ii) obtaining a benefit from or supporting the Government of Belarus by carrying on business in a strategically significant sector—construction—principally via the large “Minsk World” development project.

The key appellate issues were:

  • ECHR threshold/jurisdiction: whether a foreign company with no UK assets or business is “within [UK] jurisdiction” for Article 1 ECHR purposes merely because the UK has designated it, allegedly affecting “goodwill” and future business.
  • Proportionality (if jurisdiction established): whether any interference with A1P1 rights was proportionate applying Bank Mellat v HM Treasury [2013] UKSC 39; [2014] AC 700.
  • Domestic public law rationality: whether the designation was irrational on conventional public law grounds (including the relationship between a rationality challenge and the proportionality analysis advanced).

2. Summary of the Judgment

The Court of Appeal (Elisabeth Laing LJ, Bean LJ, and Vos MR) dismissed DANA’s appeal.

  • No ECHR Article 1 jurisdiction: DANA was not within the UK’s jurisdiction for ECHR purposes because it had no territorial presence, business, or assets in the UK; “goodwill” arguments did not change this.
  • Proportionality (in any event): even if jurisdiction had existed, the designation would have been proportionate under the Bank Mellat framework, particularly in light of the sanctions jurisprudence in Shvidler.
  • Rationality: DANA’s rationality case in the Administrative Court was, on its own presentation, parasitic on proportionality and failed; and the attempt to reframe rationality on appeal was rejected.

3. Analysis

3.1. The Legal Principle Emerging

The decision establishes (in domestic appellate authority applying Strasbourg Grand Chamber jurisprudence) a clear proposition for sanctions litigation:

  • A UK sanctions designation does not, by itself, bring a foreign person/company within the UK’s ECHR Article 1 jurisdiction where that person has no UK territorial presence, business, or assets, and relies only on asserted reputational effects, “goodwill”, or prospective future UK business.
  • The Court reinforces that Article 1 requires control over the person, not merely impact on interests, and rejects any “sanctions exception” that would expand extraterritorial jurisdiction.

A secondary but important procedural/forensic lesson also emerges: where a claimant presents rationality as an “alternative” restatement of proportionality-style points, the court may properly treat it as parasitic and dismiss it “a fortiori” once proportionality is rejected.

3.2. Precedents Cited (and How They Shaped the Decision)

(a) Jurisdiction under Article 1 ECHR

  • MN v Belgium (GC) App No 3599/18, 5 May 2020 (‘MN’)
    This was the central “bright line” authority: a state’s decision taken within its own territory, even with serious consequences abroad, does not without more bring an overseas applicant within Article 1 jurisdiction. The Court of Appeal treated MN as strongly precluding jurisdiction-by-impact arguments.
  • Bancovic v United Kingdom (GC) App No 52207/99 (‘Bancovic’) and Al-Skeini v United Kingdom (GC) App No 55721/07, 7 July 2011 (‘Al-Skeini’)
    These authorities underpinned the “exceptional circumstances” structure: extraterritorial jurisdiction is exceptional and requires special justification, typically linked to a state’s asserted control over persons or areas abroad. DANA accepted it did not fall within established categories.
  • Agostinho v Portugal App No 39371/20, (April 2024) (‘Agostinho’)
    Agostinho was decisive in rejecting any attempt to ground jurisdiction on a state’s ability to affect an applicant’s interests abroad. The Court relied on Agostinho’s statement that Article 1 “requires control over the person himself or herself rather than the person’s interests as such” and its warning against radical doctrinal expansion.

(b) “Swiss cases” and the attempted sanctions-based jurisdiction argument

  • Nada v Switzerland Ap No 10594/08, 13 September 2012 (‘Nada’) and Al Dulimi v Switzerland (App No 5809/08, 21 June 2016) (‘Al Dulimi’)
    DANA argued these supported a “sanctions bring you within jurisdiction” principle. The Court rejected that reading: the Swiss cases were treated primarily as addressing attribution (whether measures implementing UN sanctions are attributable to the state), not as expanding Article 1 jurisdiction. Further, Al Dulimi involved Swiss territorial seizure of assets—unlike DANA, which had no UK assets—making it materially distinguishable.
  • Bosphorus Hava Yollari Turizm ve Ticaret Anonim Sirketi v Ireland (App No 45036/98) (2006) 42 EHRR 1 (‘Bosphorus’)
    Bosphorus was used contextually to explain why few Strasbourg sanctions cases exist (the “equivalent protection” presumption when EU obligations are implemented). The Court used it to contextualise—not to support DANA’s jurisdiction thesis—and noted post-Brexit UK sanctions now sit outside that particular EU-law shield, but still remain governed by settled Strasbourg jurisdiction principles.

(c) A1P1 “possessions” and goodwill

  • Breyer v Department of Energy and Climate Change [2015] EWCA Civ 408; [2015] 1 WLR 4559 (‘Breyer’)
    Breyer was the leading domestic guide on “goodwill” as a possession: only existing, marketable, presently capitalisable goodwill tied to an existing business can be a possession; mere hopes of future business are not. The Court held DANA had no such goodwill “in the jurisdiction”.
  • Anheuser-Busch Inc v Portugal App 73049/01, 11 January 2007
    Cited for the principle that A1P1 protects existing possessions; future income is not a possession unless earned or definitely payable. This reinforced why “future UK business ambitions” cannot create A1P1 possessions, and cannot (via that route) manufacture Article 1 jurisdiction.

(d) Proportionality in sanctions cases

  • Bank Mellat v HM Treasury [2013] UKSC 39; [2014] AC 700 (‘Bank Mellat’)
    Provided the four-stage proportionality framework. The Court approved the judge’s structured approach and emphasised that sanctions do not require a “perfect fit” between measure and aim; rational connection may be supported by cumulative and predictive assessments.
  • Dalston Projects Limited v Secretary of State for Transport and Shvidler v Secretary of State for Foreign, Commonwealth and Development Affairs [2024] EWCA Civ 172 (together, ‘Shvidler’)
    This was treated as the modern domestic template for sanctions proportionality analysis, including deference to executive predictive judgments in foreign policy and the legitimacy of “signalling” as part of sanctions strategy.
  • Shvidler (Supreme Court decision referenced in the judgment: [2025] UKSC 30; [2025] 3 WLR 346)
    While not a cited case title as such in the provided text beyond “Shvidler”, the Court relied heavily on the Supreme Court’s affirmation that even very severe, open-ended measures can be proportionate. DANA’s case was described as materially weaker because it had no UK assets and therefore suffered far less direct impact.

(e) Public law review intensity and executive discretion

  • R (Al Rawi) v Secretary of State for Foreign and Commonwealth Affairs [2006] EWCA Civ 1279; [2008] QB 289
    Used to support an “especially broad margin of discretion” where decisions rest on foreign policy and national security type evaluative judgments.
  • R (Lord Carlile) v Secretary of State for the Home Department [2014] UKSC 60; [2015] AC 945
    Cited for the point that predictive/evaluative executive judgments may be tested for rationality but cannot be empirically proved correct—relevant to assessing sanctions’ likely effects and “signalling”.
  • R (AB) v Secretary of State for Justice [2022] AC 487
    Cited for the constraint that domestic courts should not go beyond Grand Chamber Strasbourg authority by expanding Convention doctrines.

3.3. Legal Reasoning

(1) The jurisdiction threshold was treated as determinative

The Court’s reasoning is anchored in the orthodox sequencing: Article 1 jurisdiction is a threshold criterion. Without it, Convention rights (including A1P1) are not engaged, so proportionality does not arise. DANA’s attempt was, in substance, to convert “effects” (reputational and commercial) into “jurisdiction”.

The Court refused this because it would collapse the “primarily territorial” rule and replace it with a universal “impact-based” jurisdiction—precisely what the Grand Chamber rejected in MN and Agostinho.

(2) SAMLA 2018 structure supported the territorial analysis

The Court placed weight on section 21 SAMLA 2018 (“Extra-territorial application”), which confines extraterritorial prohibitions largely to “United Kingdom persons”. DANA, as a Belarusian company, fell outside that category. This statutory framing reinforced the conclusion that, as a matter of legal architecture, UK sanctions are not designed to exert direct extraterritorial legal control over foreign entities devoid of UK connecting factors.

(3) “Goodwill” could not do two jobs at once (possession and jurisdiction)

DANA’s “goodwill” argument attempted to (i) identify a protected “possession” within A1P1 and (ii) use that as the territorial hook for Article 1 jurisdiction. The Court rejected both moves:

  • As a matter of A1P1, goodwill is protected only when it is the existing, marketable, presently capitalisable product of an existing business—per Breyer v Department of Energy and Climate Change [2015] EWCA Civ 408; [2015] 1 WLR 4559.
  • As a matter of Article 1, even if there are effects on “interests”, Agostinho confirms Article 1 requires control over the person, not the person’s interests. Effects on reputation or prospective commercial opportunities do not equate to “control” over the person.

(4) Proportionality was addressed robustly but as a fall-back

Even assuming jurisdiction, the Court endorsed the judge’s application of Bank Mellat, emphasising:

  • Legitimate aims were accepted (promotion of democracy/rule of law, discouraging repression, influencing Belarusian government behaviour).
  • “Rational connection” in sanctions does not require proof of direct causal efficacy in the individual case; government may act on cumulative, deterrent, and signalling logic, assessed with appropriate deference to executive foreign-policy judgment.
  • The lack of UK assets meant the interference with DANA’s interests was modest compared to paradigmatic cases like Shvidler, where severe worldwide freezes affecting a British citizen were nonetheless upheld as proportionate.

(5) Rationality: narrow discretion and forensic self-limitation

The Court clarified two distinct reasons DANA’s rationality argument failed:

  • Substantive: once the low threshold is met (“reasonable grounds to suspect” an “involved person”), the Regulations contemplate designation as the norm, leaving only a narrow residual discretion (e.g., a truly de minimis case). DANA’s alleged involvement (flagship construction project; Olympic sponsorship) was not de minimis.
  • Forensic: DANA’s rationality case below was framed as essentially “for all the reasons set out above” (i.e., proportionality points), so the judge was entitled to treat it as parasitic. The attempt on appeal to re-characterise rationality as a broader inquiry into discretion, inquiries, and “key arguments” was rejected as inconsistent with how the case was run.

3.4. Impact

  • Jurisdictional gatekeeping in sanctions litigation: Foreign designees with no UK presence or assets will face a steep barrier to invoking ECHR rights in UK courts, absent an established Strasbourg exception. The decision discourages attempts to create “jurisdiction by designation”.
  • Goodwill arguments constrained: The judgment confines goodwill-based A1P1 claims to existing UK business goodwill, preventing speculative “future market entry” from operating as either a possession or a jurisdictional anchor.
  • Deference and ‘signalling’ reaffirmed: The Court accepts signalling/deterrence as a legitimate component of rational connection analysis in sanctions, reinforcing the executive’s latitude in foreign policy tools.
  • Litigation strategy consequences: Claimants must plead and run (i) any challenge to “involved person” threshold and (ii) any distinct rationality/considerations challenge with clarity; otherwise courts may legitimately treat “rationality” as a restatement of proportionality submissions.

4. Complex Concepts Simplified

  • Designation: A formal listing under sanctions regulations that triggers restrictions (notably an asset freeze) and related prohibitions.
  • “Involved person”: A regulatory status. Here it included persons involved in repression of civil society, or those benefiting from/supporting the Belarusian government via strategically significant business sectors (construction).
  • “Reasonable grounds to suspect”: A low threshold. It does not require proof on the balance of probabilities; it permits action on sufficiently credible suspicion, reflecting information constraints in foreign affairs.
  • ECHR Article 1 “jurisdiction”: A gateway requirement. Convention rights must be “secured” only to people within a state’s jurisdiction—usually its territory. Extraterritorial jurisdiction is exceptional and tied to state control over a person/area, not mere overseas effects.
  • A1P1 (Article 1 of Protocol 1): Protects property (“possessions”). It generally covers existing assets and certain established business goodwill, but not speculative future income or mere aspirations to trade in a market.
  • Proportionality (Bank Mellat): A structured balancing test asking: legitimate aim; rational connection; less intrusive means; and fair balance between the individual’s rights and the public interest.
  • Wednesbury irrationality / conventional public law rationality: A lower-intensity review than proportionality, focused on whether a decision is so unreasonable that no reasonable decision-maker could have made it, and whether relevant considerations were properly addressed.
  • “Signalling”: The idea that sanctions communicate consequences, deter others, stigmatise certain conduct, and attempt to influence behaviour indirectly. Courts accept this as a legitimate sanctions rationale, though it remains an evaluative/predictive judgment.

5. Conclusion

This decision is significant for two reasons. First, it tightens the doctrinal boundary between impact and jurisdiction: UK sanctions’ overseas reputational or commercial effects do not bring a foreign, non-present, assetless company within Article 1 ECHR. Second, it confirms that even if proportionality is considered, UK courts will apply Bank Mellat in a manner attentive to the executive’s predictive judgment in foreign policy, consistent with the modern sanctions jurisprudence in Shvidler.

For future challenges by overseas designees, the case signals a clear pathway: without a concrete territorial connecting factor (assets, presence, or a recognised Strasbourg exception), Convention rights arguments are likely to fail at the threshold; and domestic rationality arguments must be distinctly pleaded and evidenced, not merely appended to proportionality submissions.